Estimates of the size of the video game industry range from $200 to $300 billion — larger than film, television and music combined, by some calculations — and Saudi Arabia, in its relentless, top-down drive to diversify from oil, is taking a big slice.
A large-scale, state-backed international video game industry conference announced this month, called Kingdom of Gaming, to be held in Riyadh next year, appears to give name to the ambition. Video games have long been a pet focus of Crown Prince Mohamed bin Salman, said to be an avowed gamer, but the kingdom went all in this year: In September, the Saudi sovereign wealth fund, with partners including an investment firm founded by President Donald Trump’s son in law Jared Kushner, announced the acquisition of video game publisher Electronic Arts for $55 billion.
It would be a buyout on a historic scale. And that’s just the latest video game related acquisition by the Saudis.
In 2022, Savvy Games Group, a video game holding company backed by the Saudi Public Investment Fund, which the crown prince chairs, spent $1.5 billion to acquire two major companies in esports — an industry centered on competitive video game tournaments which draw large viewership and offer massive prize pools. Late last year, a spokesperson for the group told the New York Times that Savvy had gobbled up 40 percent of the esports industry.
The looming Electronic Arts acquisition, which is slated to close in early 2027, would tighten the Kingdom’s grasp on the industry. EA’s “Battlefield 6,” released in October, sold 7 million copies in three days, and the company’s sports division publishes licensed titles based on Formula 1 racing, international soccer and mixed martial arts, among other sports — whose real-world equivalents have seen major investment and attention from the Saudi PIF, making them obvious targets for future synergies.
But the flashy acquisition, coming amid reports of flagging investment and pared back ambition in other areas of strategic interest to the kingdom, raises questions about the viability of its “go for broke” approach to every sector it enters.
Saudi Arabia’s spending spree is but one offshoot of its sprawling Vision 2030 strategy, a highly publicized, ultra-ambitious effort to diversify its economy through tourism, megacity projects, start-up incubation and investments in entertainment and the development of local enterprise. Within that project, funding for games represents a focus on the country’s youth.
Approximately 71 percent of the Saudi population is under the age of 35, according to a 2022 census, and the country’s National Gaming and Esports Strategy boasts that there are more than 23.5 million “gaming enthusiasts” in the country — some 67 percent of the population, with the crown prince, reportedly a Call of Duty and Final Fantasy mega-fan, among them.
Analysts say Mohammed’s focus on entertainment is meant to drum up support with that younger demographic, particularly as some of the changes ushered in by his ascent have upset older generations and religious hard-liners.
“This is a form of bread and circuses,” said Karim Zidan, the sports and dictators fellow at the New York-based Human Rights Foundation. “You entertain us, and we will do nothing to stop you moving forward.”
But neither demographics, nor the crown prince’s fandom nor even the kingdom’s considerable financial resources guarantee a slam dunk, when it comes to such investments.
“The video game industry is a hard industry that is largely hit driven, where you as a company can thrive if you come up with the next Sims or ‘Minecraft’ or ‘Fortnite,’” said Stephen Totilo, an independent journalist who writes the Game File newsletter. “But it’s also one where you can find yourself completely outmaneuvered if your competition comes up with one of those hits.”
In 2021, the crown prince’s Misk Foundation acquired 96 percent of the Japanese game studio SNK. This year, it released “Fatal Fury: City of the Wolves,” accompanied by a major marketing campaign. The game was advertised center-ring at WrestleMania 41 and soccer legend Cristiano Ronaldo, who plays for the Riyadh-based soccer club Al-Nassr, was marketed as a playable character. Still, all available data suggests the game failed to find an audience. A few weeks after launch, the company’s CEO stepped down.
“You can pour all the millions, billions of dollars you want into a game company. You can use every lever of global marketing power,” said Totilo. “It does not guarantee you a hit, and it does not protect you from failure.”
A pattern of overambition has become visible in some Saudi investments. The kingdom reportedly spent at least $50 billion starting construction of The Line, a megacity meant to span 100 miles, before dramatically scaling down the project, the Financial Times reported. And development of Qiddiya, a similar project just outside of Riyadh, which is set to include a video game district with four esports venues, golf courses, a 12 sq km area labeled on maps of the complex as “Anime World,” as well as other attractions, has scarcely advanced. As the adage goes: You have to learn to walk before you run (or build a megacity).
In regard to video games and esports, after a peak in interest during the coronavirus pandemic, much of Wall Street and venture capital interest moved on to newer, shinier objects. The resulting lean years saw a hemorrhage of jobs, studio closures and a years-long downturn in competitive gaming known as the “esports winter.”
A savvy investor might say Saudi Arabia is buying the dip. If so, they’re paying a premium for it.
“EA’s $2.8 billion in annual cash flow doesn’t justify a $55 billion buyout,” said Joost van Dreunen, a lecturer on the business of games at the New York University Stern School of Business, of the pending EA acquisition. “What does support it is EA’s global brand power and reach, especially in sports. Effectively, PIF is purchasing cultural leverage.”
Saudi Arabia has undeniably changed under bin Salman’s stewardship. “We’re talking about one of the most isolated places, even in comparison to other Arab states that were also quite socially conservative,” said Zidan of the Saudi Arabia of decades prior. “That is not exactly the case now.”
“The fact that I as an Egyptian go back to Egypt and see some of my friends and they’re telling me that they’re off to Saudi Arabia to go party because it’s easier for them to find drugs there than it is to do so in Egypt now — it’s shocking to hear,” he said.
Still, he cautioned that human rights abuses have only increased under bin Salman. “There are more executions. The police force is far more powerful,” he said.
That subject has become a minefield for some video game and esports fans — yet another potential obstacle in the path of Saudi dominance over the two industries.
One esports executive whose team has participated in events in Saudi Arabia, who spoke on the condition of anonymity for fear of reprisal, pointed to the example of a content creator who traveled to the kingdom to work as a presenter in the government-backed Esports World Cup. Their participation went largely unnoticed — until a post about it on social media drew a mass of angry reactions.
The executive added that teams partnering with Saudi Arabia were often caught in a bind, with global investors pushing for more engagement with the kingdom even as some fans loudly rejected it.
“The general fan base is much more neutral compared to two years ago,” the executive said. “Unless you cross a line — the line also being blurry.”
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